By Joseph Dobrian
Special to Furniture Today
HIGH POINT — Following a period of uncertainty, the COVID-19 pandemic has not seriously hurt the consumer credit business as it relates to furniture.
That was the main takeaway when Furniture Today recently asked a panel of executives from companies that provide financial solutions for people who buy or lease household furniture to offer their thoughts about the changes in consumer spending and financing this year.
Instead, he pandemic has forced many families to spend more time at home than they were used to, which has led them to make domestic improvements — especially in cases where limitations on public entertainment and the Federal stimulus package of a few months ago have left them with a little more disposable income.
Several executives also mentioned that customers are more likely to pre-shop online before physically visiting a store. Thus, they have to provide seamless credit solutions that work well whether or not the customer is in the store.
Also, the disruption to the supply chain — in combination with high demand, travel restrictions, and worries about infection — sometimes means that the underwriters sometimes have to wait to get paid.
However, credit providers agree that they’re positioned to work with retailers and customers who have agreed to hold off on receiving goods for a few months, and thus will delay their payments.
chief commercial officer
Alliance Data’s Card Services
Customers have been moving to e-commerce channels for years, but there has been a dramatic shift to digital in 2020. We have seen considerable growth in the home vertical, and brands that want to win in the changing landscape must do so by engaging customers both on and offline.
Regardless of channel, consumers expect a seamless experience, including awareness of payment options early in the journey and the ability to adopt, apply for and immediately access funds for the purchase. Brands that integrate payment options throughout the customer’s journey through an engaging, intuitive experience and transparency into the customer’s purchasing power so that they can make a confident choice at checkout will capitalize on digital and mobile trends while driving ticket size.
Our new Enhanced Digital Suite provides brands with the tools they need to take advantage of the shift to digital, with easy-to-integrate features designed to bring financing to the forefront of the online shopping journey.
senior vice president of business development, retail credit
Despite the pandemic, Fortiva Retail Credit has witnessed a steady — and in specific verticals, increased — demand for consumer financing in 2020. We believe this increased demand is due to prime lenders tightening underwriting and consumers investing in themselves and their homes.
Fortiva Retail Credit has a well-established presence in the home improvement and furniture segments, and we were poised to provide alternative financing options. Notwithstanding the reduced sales caused by the lockdown, health and exercise, online home furnishing and home improvement sales have exceeded forecasts for 2020.
In September, as brick-and-mortar locations gradually reopened, pent-up demand resulted in a surge in furniture sales. If holiday spending stays in line with expectations, we anticipate making up for the reduced sales during spring and ending the year strong.
Henry “Hank” Chionuma
vice president of development and marketing
Genesis Financial Solutions
The biggest change we’ve seen in 2020 is the shift towards e-commerce and a greater adoption of pay-over-time finance programs. Due to health and safety concerns, consumers had to quickly adapt the way they shop for the home, which led to a significant increase in purchases for retailers with an e-commerce solution.
Genesis Credit pay-over-time options have become even more important because they allow more consumers to purchase the items they need and want while allowing them to hold on to their cash in these uncertain times.
vice president of sales and marketing
(The biggest change has been) online shopping. Consumers are increasingly going online and shipping their purchases to their home or doing curbside pickup, and they expect retailers to offer lease-to-own purchase options alongside other purchase options.
Progressive Leasing has more e-commerce experience and better technology than any other virtual lease-to-own provider. Our turnkey and custom solutions have facilitated millions of customer applications and approvals, generating millions of dollars in revenue for our retail partners.
executive vice president
The biggest challenge of 2020 for the retailer is inventory: keeping the product on the shelves. For us, it’s more people using cash. For the consumer, it’s changes in the retail experience.
People can’t travel or eat out as much. so they’re investing in their home spaces. A hot tub retailer recently told me fulfillment is six months out because of high demand and the shortage of labor.
Finance providers are impacted by people having more cash on their hands and paying with cash. Because prime lenders have had to tighten their standards in these tough times, the lower band of their regular customers — lower in terms of creditworthiness — are being pushed into secondary and tertiary markets, so those providers are seeing more creditworthy customers.
Many customers are pre-shopping online and then looking for a quick completion of the sale either in-store or curbside.
Our business is still good. We’ve been on a tremendous growth journey over the past several years. Repayments are high and defaults lower, due to the Federal stimulus. So far, the bumps have been leveled out. People have more cash and fewer places to spend it.
senior vice president/generation manager, payment solutions
The pandemic has expedited consumers’ adoption of contactless payment solutions. This behavior has created greater demand for retailers of all sizes to deliver a safe, seamless and socially distant experience for every payments process stage: applying for credit, completing the transaction and paying a bill or servicing an account.
Also, consumers continue to use promotional financing for their large ticket purchases to give them time to pay. This is still prominent in the home space where consumers have shifted their buying behavior to continue home related purchases. Many are using promotional financing to make purchases for work/home office areas, overdue home updates, and unexpected purchases.
We find that many consumers start by refurbishing one room, such as the home office. They then re-allocate budget meant for activities like vacations to renovate other rooms, like a living room, bedroom, bathroom or media room.
TD Bank Retail Card Services
Consumers are making their spaces and places more functional and pleasing, so shoppers are generally buyers. The stimulus has provided some consumers with the opportunity to do things that were previously out of reach.
Retailers are adapting to meeting customers where they are most comfortable: online, in-home and in newly designed retail locations. Smart retailers are providing consistent experiences, regardless of where they are engaging their customers, with consistent product presentation and payment options, including financing.
Financing is a catalyst, enabling purchases with easy and convenient payment options: a key tool to help consumers in fulfilling their ambitions. Retailers can use all of the above to drive trust and loyalty.
senior vice president of sales and marketing
The biggest change we have seen so far is a shift from consumers predominantly shopping at brick-and-mortar locations to e-commerce solutions. Products that one might not expect customers to shop for online — such as furniture, tires and wheels, and appliances — are becoming more of a commonplace in the e-commerce world.
With the shift to e-commerce, lenders and payment providers now face higher risk of fraud and delinquency due to the nature of the process and the reduced human interaction. Having a strong underwriting engine and supporting fraud tools is more important now than ever.
Fortunately, Tempoe and Smart Pay were prepared for this shift and are experiencing positive growth and looking to expand to new programs every day.
president and COO
This year has certainly delivered its share of opportunities and challenges, and like many other companies, Versatile Credit had to quickly adapt to the “new normal” of our retail clients. Our view is that the way consumers approach spending and financing will continue to evolve and require continuous innovation, which happens to be one of our greatest strengths.
An obvious change is the adoption and proliferation of contactless solutions, whether in-store or online, including QR codes, which have been on our road map for quite some time and are now deployed within our “Snap Sign” technology as a means to validate the in-store presence of a consumer applying through a mobile device.
We added contactless application capability in 2019 to solve a need for our prime lending partners, but we never anticipated how it would also serve as a tool in the fight against anxiety relating to the spread of COVID-19. We have been dramatically increasing our research and development efforts in these areas, working with our partners to drive contactless functionality to our platform.
Contactless is a new standard, driven by the collective goal of creating the very best consumer experience.
We are entering a holiday season with so many unanswered questions about what to expect for both consumers and retailers. Our current platform metrics strongly support the critical need for retailers to build a comprehensive financing program, including secondary and tertiary providers, to maximize the financing opportunities for shoppers.
vice president of sales
West Creek Financial
In today’s financial landscape, more customers are in need of a way to “bridge the gap.” It’s important to offer a lease-to-own option to give customers the means to get what they need, even when their credit isn’t perfect or established yet.
Another big shift in the financing industry is the trend toward more transparency with customers. West Creek has reconfigured the entire application process to maximize transparency and to ensure that the customer is completely familiar with their terms before signing a lease. This helps drive repeat and referral business for the dealer and ultimately a very satisfied customer.
With online shopping on the rise, we’re also seeing a huge demand for e-commerce and web integration. We’re in the process of launching our e-commerce integration and have already seen some early success.
We aren’t just transactional. We are strategic partners for our dealers. We anticipate the needs of the furniture industry, and we use our dealers’ feedback to innovate our product accordingly.
The post What has been the biggest change you have seen in consumer spending and the use of financing in 2020? appeared first on Furniture Today.